Posted by Biz Central USA Marketing Team on July 23, 2010 under Small Biz and Entrepreneurship,Small Biz Certifications,Small Biz News | Be the First to Comment

There are many certifications that can greatly benefit small businesses, such as: WBE, DBE, MBE, HUBZone and more.  Yet, one of the least understood and most often misunderstood certifications is the SBA 8a certification. The SBA’s 8a BD Program, named for a section of the Small Business Act, is a business development program created to help small disadvantaged businesses compete in the American economy and access the federal procurement market.

In order to qualify for the SBA 8a Certification the business must:

• Be a small business
• Be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States
• Demonstrate potential for success 

The SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

• Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured
• Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided
• Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided
• Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided
• General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction
• Special Trade Construction: Annual receipts may not exceed $7 million; and
• Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product

The SBA defines socially disadvantaged individuals as those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as members of a group. Social disadvantage must stem from circumstances beyond their control. In the absence of evidence to the contrary, individuals who are members of the following designated groups are presumed to be socially disadvantaged:

• Black Americans
• Hispanic Americans
• Native Americans (American Indians, Eskimos, Aleuts, and Native Hawaiians)
• Asian Pacific Americans (persons with origins from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, U.S. Trust Territory of the Pacific Islands [Republic of Palau], Commonwealth of the Northern Mariana Islands, Laos, Cambodia [Kampuchea], Taiwan; Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Republic of the Marshall Islands, Federated States of Micronesia, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru; Subcontinent Asian Americans (persons with origins from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands or Nepal), and ,members of other groups designated by the SBA.

The SBA defines economically disadvantaged as socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities. An economically disadvantaged individual’s net worth, after excluding the individual’s equity in the firm and the equity in the primary residence, may not exceed $250,000. SBA will also consider the individual’s average two-year income, fair market value of all assets, access to credit and capital, and the financial condition of the applicant firm in evaluating economic disadvantage.

In order to be eligible for the 8a certification the SBA requires that at least 51% of the applicant firm is directly and unconditionally owned by socially and economically disadvantaged individuals.

The SBA considers the business’ potential for success requirement based on the following:

• the technical and managerial experience of the applicant firm’s managers
• the firm’s operating history
• ability of the firm to access credit and capital
• the firm’s financial capacity
• the firm’s record of performance
• whether the applicant firm or individuals employed by the firm hold the requisite licenses if the firm is engaged in an industry requiring professional licensing

Also the small business must have been operational for at least two full years as evidenced by business income tax returns for each of the two previous tax years which show operating revenues in the primary industry in which the applicant firm is seeking 8a certification.

By having a better understanding of the 8a certification, its benefits, and requirements you should be able to determine if your small business would qualify for this extremely beneficial certification.  If you don not qualify, there are still many options available for small disadvantaged businesses.  Some of these include getting a MBE certification, DBE certification or getting certified as a women owned business. Regardless of which certification/s your small business qualifies for, any and each certification will prove to be a valuable asset for years to come.

Posted by Biz Central USA Marketing Team on February 8, 2010 under Small Biz and Entrepreneurship,Small Biz Certifications | Be the First to Comment

If you are a small business owner and are considering applying for the SBA 8(a) program, here are some key eligibility requirements and pointers to help you before you invest time into the application process.

First and foremost the SBA 8(a) program only certifies firms that are currently in business. In order to apply you must be the majority owner and also involved full-time in the day-to-day management of the business to meet eligibility requirements. If you meet these requirements the next key point to consider when applying is the two year business operation requirement. The 8(a)certification program requires applicants to be in business for at least two years before their application will be considered for approval. Exceptions to this rule are sometimes granted but are not guaranteed. If you have been in business for less than two years and have successfully generated profits (this does not mean you have to been making huge profits), and have a successful track record with contract completion a waiver can be requested.

Only applicants who are members of socially disadvantaged groups and are economically disadvantaged can be considered for approval to the program. Many 8(a) applicants become ineligible for 8(a) certification due to the $250,000 net worth limit. This limit is defined as a personal net worth of $250,000 or less, excluding the equity in a personal residence or business. It is crucial not to make attempts at hiding assets from the SBA. The SBA has an extensive amount of tools and knowledge base regarding determining the size of a business and looking at two years tax returns to know what an individual’s net worth may be.

It is crucial for the SBA that as a small business owner you have enough working capital and business contracts that they deem your business eligible to have a high likelihood of success. Some planning can be done to mitigate this problem if the individual’s net worth is close to $250,000, such as selling securities and investing the money in the primary residence. Unfortunately for individuals with extremely high net worth’s it is difficult or unlikely to work around this clause in the SBA application.

Finally only applicants who are US citizens are eligible to apply for the 8(a) certification. Each year the federal government sets aside millions of contract dollars for certified small businesses to bid and receive contracts relating to the many federal agencies that exist. Many federal contracts are “set aside” for 8(a) firms, meaning that only certified businesses may apply or be considered. The designation of SBA 8(a) is a highly regarded program, if you meet these requirements you should consider pursuing this designation for your small business.

Posted by Biz Central USA Marketing Team on January 28, 2010 under Small Biz Certifications,Small Biz Planning | Be the First to Comment

In order to do business with the Federal Government, an interested small business should become certified under the Small Business Administration’s (SBA) 8(a) program. The SBA’s mission is to maintain and strengthen the Nation’s economy by aiding, counseling, assisting, and protecting the interests of small businesses and by helping businesses and families recover from disasters. The BD (Business Development) assists firms owned and controlled by economically and socially disadvantaged individuals, enter the economic mainstream. The 8a certification process is complex and takes on average three to four months to get completed. Once you have completed the process and received your wonderful letter saying, “congratulations you have been accepted” you still have to complete a SBA form 1010C.

This is a business plan that includes a detailed marketing plan for your business. Additional required topics included within the 1010C form are as follows: executive summary, business history, business environment, products and services, as well as other crucial topics. As soon as you receive your letter of approval from the SBA you will be asked to contact your local office (these specific details will be listed in your letter) and set up an appointment to review your business plan. This meeting will help to evaluate your small business’ potential for success as a certified 8(a) participant. If you are prepared for that meeting by already having a business plan prepared, it will enable you to complete the process immediately and receive your 8a certification. In other words, you enable your small business to begin bidding and contracting.

This is the final step to the SBA’s 8(a) certification process and it can delay the process if you are not prepared with a 1010c plan. Don’t delay your firm’s ability to receive contracts because you don’t have a business plan. In the words of John L. Beckley, “Most people don’t plan to fail, they fail to plan.”

Posted by Biz Central USA Marketing Team on November 11, 2009 under Small Biz and Entrepreneurship | Be the First to Comment

During the business certification process, small business owners will undoubtedly come across the terms “economically disadvantaged” and “socially disadvantaged”. But what do these terms actually mean? This all depends on the agency responsible for granting the certification your small business wishes to obtain. Some small business certification programs allow for business owners to have a higher net worth than others, and some  limit their programs to members of certain racial or ethnic groups. These differences can be significant from program to program, and it is recommended that you work with a competent professional in order to guide you through the business certification process, including which certifications your small business may qualify for. In order to keep things simple, we will focus on defining social and economic disadvantage for the Small Business Administration’s 8(a) Business Development program, or the SBA 8(a).

The Small Business Administration’s 8(a) Business Development program was created in order to provide contracting opportunities to minority-owned and other disadvantaged businesses. The SBA considers two factors when certifying a business as disadvantaged -whether or not the qualifying owner has been subject to prejudice resulting in a negative impact on their advancement in the business world, and the net worth of the qualifying owner. To keep matters simple, a socially disadvantaged individual whose net worth is less than $250,000 will be considered economically disadvantaged, but what exactly does “socially” disadvantaged mean? The SBA automatically presumes the following individuals to be socially disadvantaged:

• Black Americans
• Hispanic Americans
• Native Americans
• Asian-Pacific Americans
• Subcontinent Asian-Americans

But what about persons who have experienced social disadvantaged as a result of other factors, such as service-disabled veterans or other Americans with disabilities? These individuals are not presumed to be socially disadvantaged, and as a result, must provide a preponderance of the evidence detailing their personal experiences of substantial and chronic disadvantage in American society. This evidence must be presented in the form of a narrative that is to be included with the 8(a) business certification application. It is important to note that no one can guarantee whether or not a person who is not a member of an above-designated group will be granted disadvantaged status by the SBA, and subsequently, have their business certified under the 8(a) program. However, the SBA does provide general guidelines for factors that are considered when determining whether or not a person is socially disadvantaged, such as access to education, employment, and business credit or capital.

If you are unsure as to whether or not your business meets the criteria for 8(a) certification, work with a competent professional who will be able to determine if you possibly qualify for business certification under this program, and who will also assist you in drafting an effective statement of economic and social disadvantage. By doing so you will greatly increase your business’ chances of being certified under the 8(a) program, and ultimately, being awarded lucrative government contracts under this program.